BTB Real Estate Investment Trust (BTBIF) Q2 2024 Earnings Call Highlights: Record Occupancy ...
Portfolio Size: 6.1 million square feet, 75 properties valued at over $1.2 billion.
Leasing Activity: 256,000 square feet leased in the quarter.
Occupancy Rate: 94.6%, a record high for BTB.
Adjusted FFO per Unit: $0.104, a decrease of $0.014 from the same quarter last year.
Rental Revenue Increase: 1.6% compared to the same period last year.
Net Operating Income (NOI): Decreased by 0.5% compared to the same quarter last year.
Same Property NOI: Increased by 1.4% for the quarter.
Industrial Segment SPNOI: Increased by 7.3% compared to the same period last year.
Necessity-Based Retail SPNOI: Decreased by 0.8% compared to the same quarter last year.
Suburban Office SPNOI: Decreased by 0.9% for the quarter.
Distribution Payout Ratio: AFFO adjusted payout ratio was 80.2% for the quarter.
Total Debt Ratio: 58.1%, a decrease of 20 basis points from the prior quarter.
Weighted Average Interest on Debt: 4.84%, an increase of 11 basis points from the last quarter.
Cash and Credit Facilities: $1 million in cash and $18 million available under credit facilities.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
BTB Real Estate Investment Trust (BTBIF) achieved a record committed occupancy rate of 94.6% for the quarter.
The company successfully leased and renewed approximately 257,000 square feet across its portfolio, with a significant portion coming from the suburban office segment.
BTB Real Estate Investment Trust (BTBIF) reported a 6.6% increase in lease renewal rates for the first half of the year.
The industrial segment's same property net operating income (SPNOI) increased by 7.3% compared to the same period last year.
The company is actively pursuing densification opportunities and has signed a lease for a new development project in Levis, Quebec, which is expected to enhance property valuation.
Negative Points
Adjusted funds from operations (FFO) per unit decreased by $0.014 compared to the same quarter last year, primarily due to increased interest and administrative expenses.
Net operating income decreased by 0.5% compared to the same quarter last year, partly due to tenant bankruptcies.
The company faces a new leasing challenge with a 133,000 square foot vacancy in its industrial segment due to a tenant bankruptcy.
BTB Real Estate Investment Trust (BTBIF) is exploring refinancing options for its convertible debentures, which could impact financial flexibility.
The suburban office and necessity-based retail segments experienced decreases in same property net operating income (SPNOI) due to tenant bankruptcies and lease inducements.
Q & A Highlights
Q: Can you provide an update on the potential proceeds from the sale of the three office properties currently on the market? A: Michel Leonard, President and CEO, stated that the expected proceeds from the disposition of these properties are between $50 million to $60 million.
Q: What are your plans for refinancing the convertible debentures, and are you leaning towards any specific option? A: Marc-Andre Lefebvre, CFO, mentioned that all options are on the table, including refinancing with a new convertible or adding second tranches on existing mortgages to repay the convertible bond.
Q: Regarding the industrial bankruptcy, what was the in-place rent, and what are the expectations for re-leasing the property? A: Michel Leonard explained that the in-place rent was $7 per square foot, and they are currently marketing the property with an expected lease rate between $11 to $13 net, which could potentially increase the property's value.
Q: How are you planning to handle the debenture maturity, and what is your preferred approach? A: Michel Leonard expressed a preference for up-financing on some properties to cover the $24 million debenture maturity, as it would be more cost-effective than issuing a new debenture.
Q: What are your expectations for the remaining office leases maturing this year? A: Michel Leonard is confident in achieving a high lease renewal rate, having already renewed 80% of leases this quarter, including those maturing in 2025 and 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.